How to value Tesla
Tesla’s soaring valuation — it breached the $1 Trillion level recently on the news that Hertz had placed a massive order for Model 3s– continues to confound some market watchers. By conventional metrics, neither its sales nor profits, even projected explosively, merit such riches. (CEO Elon Musk, himself, wondered why the Hertz order had spiked the valuation, since the company isn’t lacking demand for its products.) Meanwhile, Tesla bears are packing it in: The percentage of Tesla stock borrowed by traders has slumped to its lowest level since the company went public.
So, what gives? Is the stock untethered from reality, pumped full of helium by market sentiment, destined to pop at a certain altitude?
Here’s my explanation (I’m sure you’ve heard this statement before since it’s applied periodically to high-flyers. …